The two oil companies signed a deal with state-owned Algerian energy giant Sonatrach to pursue offshore exploration in the country while working together on exploration permits.

"Together with Sonatrach and Total, we will have the opportunity to explore the deep waters of the Algerian offshore, a virtually unexplored geological province," Eni CEO Claudio Descalzi said.

Eni, the biggest foreign oil and gas player in Algeria, said it had also agreed with Sonatrach to take a 49 percent stake in three oil blocks in the Algerian desert estimated to hold 145 million barrels of oil.

The licences cover an area in the North Berkine basin where all Eni's production assets are located and production is expected to start by the end of 2020.

Eni has been operating in Algeria since 1981 and has strategic contracts with Sonatrach to import around 20 percent of Italy's gas.

With strong output potential in Libya and Egypt, it is looking to help create a gas hub in the Eastern Mediterranean area.

It is in advanced talks with Spain's Naturgy to re-open its liquefied natural gas terminal at Damietta in Egypt which it sees starting operations next year.

Eni currently has stakes in 32 mining permits in Algeria, and produces for itself around 90,000 barrels of oil equivalent per day.